Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)Chapter 2 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
ASIC Supervisory Cost Recovery Levy
2.1 These Bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 The Bills impose a levy on persons regulated by ASIC for the purpose of recovering ASIC's regulatory costs. The levy will be calculated based on certain measures of business activity that are proxies for ASIC's regulatory costs incurred in relation to those entities.
2.3 The activity metrics that will be used to apportion ASIC's regulatory costs will be reported to ASIC in annual returns each year. Where an entity has failed to provide this information to ASIC they will be subject to a strict liability criminal offence. The entity may also have a default assessment made against them, where they have failed to provide a return, or the information provided in the return is false or misleading.
2.4 If ASIC is not satisfied with the information used to calculate the levy, then they may issue a notice to an entity asking them to furnish information or produce documents to substantiate that information. Non-compliance with such a notice will be a strict liability criminal offence.
2.5 ASIC will be required to publish information used in the calculation of the levy in an annual legislative instrument each year. This information will be de-personalised and in an aggregate format. ASIC will also publish this information on its website each year, in a similar format.
2.6 Leviable entities that have not paid a levy when it is due and payable will be subject to a late payment penalty. Similarly, where a leviable entity has submitted false or misleading information which has resulted in them paying a lesser amount than they otherwise would be liable to pay, they will be subject to a shortfall penalty.
2.7 Where entities have failed to pay a levy, late payment penalty or shortfall penalty for a twelve month period, ASIC may take certain administrative actions, including suspension or cancellation of licences or registration.
Human rights implications
Collection of information
2.8 A number of provisions of the Collection Bill engage article 17 of the International Covenant on Civil and Political Rights, which prohibits unlawful or arbitrary interferences with a person's privacy. These rights are engaged where:
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- a person is required to provide information to ASIC in an annual return; and
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- a person must answer a substantiation notice, requiring information to be provided.
2.9 The requirement to provide a return involves the collection, storage and use of information for the purpose of calculating the rates of levy for all leviable entities in a sub-sector. The collection and storage of this information is necessary because it is used to apportion ASIC's regulatory costs.
2.10 While this information is collected by ASIC, its use is limited to calculation of the levies. This is because the Consequential Amendments Bill makes information collected under the Collection Bill protected information for the purposes of the ASIC Act. Because it is protected information, ASIC must take all reasonable steps to protect that information from unauthorised use or disclosure.
2.11 Significantly, the only use or disclosure of this information will be through ASIC issuing an annual legislative instrument and publishing a dashboard report that will contain de-personalized summary statistics of this information, reported at the sector and sub-sector levels. Because this disclosure will be de-personalized and merely show summary statistics, its publication will be permitted under the ASIC Act.
2.12 A more general disclosure of personal or protected information to the public is not permitted under the Collection Bill.
2.13 To the extent the Collection Bill engages Article 17, it does so appropriately and is consistent with its bill's objectives. This is because the collection of the information is necessary to calculate the amounts of levy, and to the extent that personal information is collected and stored, its disclosure and use is limited to publishing de-personalized summary information. Offence of failing to provide a return or complying with a substantiation notice
2.14 A number of the provisions of the Collection Bill engage article 14(2) of the International Covenant on Civil and Political Rights, that a person shall have the right to be presumed innocent until proven guilty according to law. These bills create strict liability criminal offences where:
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- a person has failed to provide a return to ASIC (subsection 11(6)); or
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- a person has not complied with a substantiation notice (section 19).
2.15 Both of these offences are subject to a maximum penalty of 10 penalty units.
2.16 The information that is contained in both returns and substantiation notices are used to determine the amounts of levy that entities will be liable to. Because of the mechanics of the levy calculation, if some entities fail to report this information, or provide false information, then all entities in that subsector may face a different amount of levy than they otherwise would. This is because the information provided will be used to determine that entity's share of ASIC's regulatory costs. If this information is inaccurate or not provided, the integrity of the system, will be compromised. This also protects the public finances, by ensuring that entities are levied the appropriate amount.
2.17 For both offences, there exists the offence-specific defence of a reasonable excuse, so that a person will not be liable where they have such an excuse. In addition, for non-compliance with a substantiation notice, a person is not liable if they comply with the notice to the extent that they are able to comply.
2.18 These offence-specific defences also engage article 14(2) of the International Covenant on Civil and Political Rights because they displace the assumption that the prosecution must prove every element of the offence. However, whether a person has a reasonable excuse, or has complied with a notice to the extent that they are able to are matters that are peculiarly within the knowledge of the defendant, particularly given the wide nature of the defences. It would be unreasonably time consuming and costly to ask the prosecution to disprove in each case any possible reasonable excuse for not submitting a return, or complying with a substantiation notice. This stands in contrast to a defendant, who would be able to establish more easily whether there exists such an excuse, or they have complied to the extent that they are able to.
2.19 To establish these defences, a person bears the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist. If the defendant discharges this burden, the prosecution must prove those matters beyond a reasonable doubt. This is easier for a defendant to discharge, and does not completely displace the prosecutor's burden; it merely defers that burden until after the evidential burden is discharged.
2.20 To the extent the Collection Bill engages Article 14, it is does so appropriately and is consistent with the bill's objectives. This is because of the need to protect the general revenue and ensure the integrity of the levy calculations. Accordingly, a strict liability criminal offence is justified for both matters. As there is only a penalty of 10 penalty units, and there exists wide offence-specific defences, the imposition of strict liability is proportional. The offence-specific defences are also appropriate and adapted because the matters that establish those defences are peculiarly within a defendant's knowledge, so can be discharged more easily than by the prosecution disproving the matter.
Conclusion
2.21 These bills are compatible with the human rights they engage and do not unnecessarily, unreasonably or disproportionately limit the rights to unlawful or arbitrary interference with privacy, or the presumption of innocence.